Q: Would you say this is an accurate way to characterize Knight Therapeutics?
The Globe and Mail reports in its Monday edition that the markets are on edge and trend followers are running for the exits. The Globe's Norman Rothery writes in the Inside the Market column that it is hard for companies to raise money while fear stalks the land. Mr. Rothery says they risk becoming zombie stocks that shamble around a bit before keeling over. He says even in good times, firms with negative earnings fare poorly and are, as a group, best avoided. For the current column, Mr. Rothery says he focused on stocks that are, potentially, in much more dire circumstances. To find them he looked at earnings before interest, taxes, depreciation and amortization or EBITDA. It is bad enough to fall into the red after paying normal and recurring business expenses such as interest and taxes and other expenses; it can be deadly having negative earnings even before these essentials are paid for. Companies with negative EBITDAs are in a particularly precarious position and may be zombies. Matters get worse when the markets tumble and it becomes next to impossible to borrow money or to sell stock. Mr. Rothery's potential zombie stocks are Hexo, Knight Therapeutics, Advanz Pharma, Katanga Mining and Paramount Resources.
Thanks as always,
Rob
The Globe and Mail reports in its Monday edition that the markets are on edge and trend followers are running for the exits. The Globe's Norman Rothery writes in the Inside the Market column that it is hard for companies to raise money while fear stalks the land. Mr. Rothery says they risk becoming zombie stocks that shamble around a bit before keeling over. He says even in good times, firms with negative earnings fare poorly and are, as a group, best avoided. For the current column, Mr. Rothery says he focused on stocks that are, potentially, in much more dire circumstances. To find them he looked at earnings before interest, taxes, depreciation and amortization or EBITDA. It is bad enough to fall into the red after paying normal and recurring business expenses such as interest and taxes and other expenses; it can be deadly having negative earnings even before these essentials are paid for. Companies with negative EBITDAs are in a particularly precarious position and may be zombies. Matters get worse when the markets tumble and it becomes next to impossible to borrow money or to sell stock. Mr. Rothery's potential zombie stocks are Hexo, Knight Therapeutics, Advanz Pharma, Katanga Mining and Paramount Resources.
Thanks as always,
Rob
